As the market continues to motor ahead following the US Federal Reserve's latest quantitative easing plans, transport group Stagecoach is in the slow lane.

Its shares have dipped 1.7p to 289.3p after Citigroup moved its recommendation from buy to neutral, after the company's recent price rise. Stagecoach owns 49% of Virgin Rail which recently lost out to FirstGroup in the battle for the next franchise for the West Coast Mainline, amid much controversy. Citi said:

Since 1 April Stagecoach has gained 14% versus its peers at 9% to falls of 7%. We do not see sufficient upside in non-rail businesses to support a further increase in valuation and higher target price.

We see limited scope for Stagecoach to outperform further in the near term — without an assumption of success in bidding for new UK rail franchises. We believe the disagreements that have followed the West Coast franchise award are a timely illustration of the hazards in assuming future potential value from UK rail.

UK bus also faces significant headwinds in recovering with higher post-hedge fuel costs through fare increases in a tough economic environment. In North America we expect the acquisition of parts of Coach US to accelerate the expansion of Megabus North America, but not to the point where a meaningful earnings contribution is evident and as such the value of a business with great potential could to be more explicitly reflected in our Stagecoach valuation.

But National Express has accelerated 5.8p to 229.3p after Citi moved from neutral to buy:

We see medium term upside that does not rest on UK rail franchises — with the real risk that terms prove to be unrealistic. Key divisions can broaden. The acquisition of Peterman gives a platform to expand in asset light US transit and paratransit markets with scope for Coach to enter new markets in Europe.